Vikas Jagwayan, Kolkata V. PCIT, Kolkata, Kolkata

ITA 1813/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6638 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: A K TIBREWAL
• Keywords: Principle of natural justice
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI A. T. VARKEY, JM & SHRI A.L.SAINI, AM ] I.TA NO. 1813/KOL/2017 ASSESSMENT YEAR: 2014-15 VIKAS JAGWAYAN (PAN: ACPPJ 8901 L) VS. PR. CIT, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 09.04.2018 DATE OF PRONOUNCEMENT 27.06.2018 FOR THE APPELLANT SHRI A. K. TIBREWAL, FCA FOR THE RESPONDENT SHRI P.K. SRIHARI, CIT ORDER PER SHRI A.T. VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE, AN IND IVIDUAL AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-15, KOLKATA DA TED 07.06.2017 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR ASSESSMENT YEAR 2014- 2015. 2. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSE E HAD MADE A DONATION OF RS.20,00,000/- TO M/S. SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH (HEREINAFTER REFERRED TO AS M/S. SHGPH) AND CLAIMED WEIGHTED D EDUCTION OF RS.35,00,000/- AS DEDUCTION U/S 35(1)(II) OF THE ACT @175% OF THE AMO UNT PAID TO THE SAID M/S. SHGPH. THE A.O. AFTER TAKING NOTE OF THE GAZETTE NOTIFICATION DATED 28.01.2010 ISSUED BY CBDT UNDER GOVT. OF INDIA WHICH RECOGNIZED M/S. SHGPH AS AN IN STITUTION WHICH IS ENTITLED FOR WEIGHTED DEDUCTION U/S 35(1)(II) OF THE ACT, ALLOWE D THE WEIGHTED DEDUCTION @175% FOR THE DONATION GIVEN BY THE ASSESSEE BY ASSESSMENT OR DER DATED 29.06.2016. LATER, PR. CIT CAME ACROSS A COMMUNIQU DATED 15.09.2016 OF CBDT W HICH CONVEYED THE INFORMATION 2 VIKAS JAGWAYAN I.TA NO. 1813/KOL/2017 ASSESSMENT YEAR: 2014-15 THAT THE CENTRAL GOVT. HAS RESCINDED THE RELEVANT N OTIFICATION NO.4/2010 DATED 28.01.2010 TO THE EFFECT THAT THE SAID NOTIFICATION WOULD BE D EEMED AS NOT ISSUED FOR ANY TAX BENEFITS UNDER THE ACT TO THE SAID RESEARCH INSTITUTE. TAKIN G NOTE OF THIS DEVELOPMENT, THE LD. PR. CIT ISSUED A NOTICE TO THE ASSESSEE BY WHICH HE CONVEYE D HIS INTENTION TO INTERFERE IN THE ASSESSMENT ORDER PASSED BY THE A.O ON 29.06.2016, B Y EXERCISING HIS REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT, WHICH AC CORDING TO HIM WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LATER, THE AR OF THE ASSESSEE ENTERED APPEARANCE BEFORE THE PR. CIT AND AFTER TAKING NOTE OF THE SUB MISSIONS OF THE LD. AR OF THE ASSESSEE, THE PR. CIT WAS PLEASED TO CANCEL THE ASSESSMENT OR DER, SINCE ACCORDING TO HIM THE A.O HAS PASSED AN ORDER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BY ALLOWING WEIGHTED DEDUCTION @175% OF DONATION TO M/S. SHGPH U/S 35(1)(II) OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO FRAME FRESH ASSES SMENT. AGGRIEVED, THE ASSESSEE IS BEFORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT M/S. SHGPH WAS RECOGNIZED VIDE GAZETTE NOTIFICATION DATED 28.0 1.2010 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT IN SHORT), MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOVT. OF INDIA U/S 35(1)(II) OF THE ACT. WE NOTE THAT M/S. S HGPH WAS ALSO RECOGNIZED AS A SCIENTIFIC INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY MINISTRY OF SCIENCE & TECHNOLOGY, GOVT. OF INDIA. THE RENEWAL OF RECOGNITION AS SIRO BY THE DE PARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH UNDER THE SCHEME ON RECOGNITION OF SCIENTI FIC AND INDUSTRIAL RESEARCH ORGANIZATION, 1988 WAS MADE FOR THE PERIOD FROM 01. 04.2010 TO 31.03.2013 VIDE COMMUNICATION IN F.NO.14/473/2007-TU-V DATED 17.06. 2010. WE NOTE THAT THE ASSESSMENT ORDER WAS PASSED ON 29.06.2016 ALLOWING THE ASSESSE E WEIGHTED DEDUCTION @175% OF THE AMOUNT PAID TO M/S. SHGPH U/S 35(1)(II) FOR AN AMOU NT OF RS.20,00,000/- GIVEN AS DONATION TO M/S. SHGPH. THE ASSESSEE HAS CHALLENGE D IN THE FIRST PLACE, THE VERY USURPATION OF JURISDICTION BY LD. PRINCIPAL CIT TO INVOKE HIS REVISIONAL POWERS ENJOYED U/S 263 OF THE ACT. THEREFORE, FIRST WE HAVE TO SEE WHE THER THE REQUISITE JURISDICTION NECESSARY TO ASSUME REVISIONAL JURISDICTION IS THERE EXISTING BEFORE THE PR. CIT TO EXERCISE HIS POWER. 3 VIKAS JAGWAYAN I.TA NO. 1813/KOL/2017 ASSESSMENT YEAR: 2014-15 FOR THAT, WE HAVE TO EXAMINE AS TO WHETHER IN THE F IRST PLACE THE ORDER OF THE ASSESSING OFFICER FOUND FAULT BY THE PRINCIPAL CIT IS ERRONEO US AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR THAT, LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDENCE LAID DOWN BY THE HONBLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. C IT [2000] 243 ITR 83(SC) WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE C IT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOUS AND SO F AR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE FOLLOWING CIRCUMSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS ORDER, THAT IS (I) IF THE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT ASSUMPTION OF FACT; OR (II) INCORRECT APPLICATION OF LAW; OR (III )ASSESSING OFFICERS ORDER IS IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE; OR (IV) IF THE OR DER IS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND; (V) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM; THEN THE ORDER PASSED BY THE ASSESSING OFFICER CAN BE TE RMED AS ERRONEOUS ORDER. COMING NEXT TO THE SECOND LIMB, WHICH IS REQUIRED TO BE EXAMINE D AS TO WHETHER THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO THE INTEREST OF REV ENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (SUPRA) HEL D THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THEIR LORDSHIP HELD THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING O FFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS TO T HE REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VI EW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDIC IAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE IN LAW. 4. TAKING NOTE OF THE AFORESAID DICTUM OF LAW LAID DOWN BY THE HONBLE APEX COURT, LET US EXAMINE WHETHER THE ASSESSING OFFICER PASSED ORDER U/S 143(3) DATED 29.06.2016 IS 4 VIKAS JAGWAYAN I.TA NO. 1813/KOL/2017 ASSESSMENT YEAR: 2014-15 ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE HAD GIVEN DONATION OF RS.20,00,000/- TO M/S. SHGPH AND HAD CL AIMED WEIGHTED DEDUCTION U/S 35(1)(II) OF THE ACT, WHICH HAS TO BE ALLOWED PROVI DED THE ASSESSEE GIVES DONATION TO ANY UNDERTAKING WHICH HAS ITS OBJECTS OF SCIENTIFIC RES EARCH AND SUCH UNDERTAKING IS APPROVED FOR THE PURPOSE OF THIS CLAUSE BY THE PRESCRIBED AU THORITY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS EXAMINED THI S FACT AND HAS CLEARLY MADE A FINDING OF FACT THAT M/S. SHGPH IS AN APPROVED UNDERTAKING U/S 35(1)(II) OF THE ACT AFTER PERUSAL OF GAZETTE OF INDIA. IN SUCH A SCENARIO, THE ACTI ON OF THE A.O CANNOT BE HELD TO BE ERRONEOUS BECAUSE THE CLAIM MADE BY THE ASSESSEE WA S VALID. IT HAS TO BE KEPT IN MIND THAT WHEN THE DONATION WAS GIVEN BY ASSESSEE TO M/S. SHG PH, THE UNDERTAKING WAS ENJOYING APPROVAL AS PER LAW. THE SUBSEQUENT CANCELLATION OF THE APPROVAL U/S 35(1)(II) BY CENTRAL GOVT. CANNOT IN ANY WAY UNDERMINE THE CLAIM OF THE ASSESSEE FOR THE DONATION GIVEN BY HIM BECAUSE PARLIAMENT IN ITS WISDOM HAS ENVISAGED SUCH AN EVENTUALITY AND INSERTED BY TAXATION LAWS (AMENDMENT) ACT, 2006 WITH RETROSPECT IVE EFFECT FROM 01.04.2006 AN EXPLANATION IN SECTION 35 OF THE ACT WHICH READS AS UNDER AN EXPLANATION TO SECTION 35(1)(II) WHICH READS AS UNDER: SECTION 35(1)(II) EXPLANATION THE DEDUCTION, TO WHICH THE ASSESSEE IS ENTITLED IN RESPECT OF ANY SUM PAID TO A RESEARCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION TO WHICH C LAUSE (II) OR CLAUSE (III) APPLIES, SHALL NOT BE DE NIED MERELY ON THE GROUND THAT, SUBSEQUENT TO THE PAYMEN T OF SUCH SUM BY THE ASSESSEE, THE APPROVAL GRANTED TO THE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION REFERRED TO IN CLAUSE (II) OR CLA USE (III) HAS BEEN WITHDRAWN. FROM THE READING OF THE AFORESAID PROVISION, IT IS VERY CLEAR THAT THE PAYER (THE ASSESSEE HEREIN) WOULD NOT GET AFFECTED IF THE RECOGNITION G RANTED TO THE PAYEE HAD BEEN WITHDRAWN SUBSEQUENT TO THE DATE OF CONTRIBUTION BY THE ASSES SEE. HENCE, NO DISALLOWANCE U/S 35(1)(II) OF THE ACT COULD BE MADE IN THE INSTANT CASE EVEN I F THE APPROVAL HAS BEEN RESCINDED LATER AS IT HAPPENED IN THIS CASE. IT IS NOT THE CASE OF THE LD. PR. CIT THAT WHEN THE CONTRIBUTION OF RS.20,00,000/- WAS MADE BY THE ASSESSEE TO M/S. SHG PH, IT WAS NOT RECOGNIZED U/S 35(1)(II) OF THE ACT, SO LEGALLY THE AOS ACTION TO ALLOW WEIGHTED DEDUCTION U/S 35(1)(II) OF 5 VIKAS JAGWAYAN I.TA NO. 1813/KOL/2017 ASSESSMENT YEAR: 2014-15 THE ACT CANNOT BE HELD TO BE ERRONEOUS. THEREFORE, THE A.OS ORDER DATED 29.06.2016 CANNOT BE TERMED AS ERRONEOUS AND THEREFORE, THE AS SUMPTION OF REVISIONAL JURISDICTION OF THE LD. PR. CIT ITSELF DOES NOT SATISFY CONDITION P RECEDENT TO INVOKE THE JURISDICTION U/S 263 OF THE ACT FAILS. THE SUBSEQUENT DEVELOPMENTS I.E. CBDT NOTIFICATION RESCINDING THE RECOGNITION FOR M/S. SHGPH ON 15.09.2016 CANNOT BE A GROUND TO HOLD THAT A.OS ORDER ON 29.06.2016 IS ERRONEOUS IN THE LIGHT OF THE EXPLANA TION IN SECTION 35(1)(II) OF THE ACT (SUPRA). THEREFORE, IN ANY CASE THE ASSUMPTION OF R EVISIONAL JURISDICTION OF THE LD. PR. CIT ITSELF DOES NOT SATISFY CONDITION PRECEDENT TO INVO KE THE JURISDICTION U/S 263 OF THE ACT AND, THEREFORE, THE ORDER IMPUGNED IS QUARUM-NON JUDICE AND, THEREFORE, THE ORDER IS NULL IN THE EYES OF LAW AND SO WE ARE INCLINED TO CANCEL THE IM PUGNED ORDER OF LD. PR. CIT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 27.06.2018. SD/- SD/- [A. L. SAINI] [A. T. VARK EY] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27.06.2018 [RS, SR. PS] COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE VIKAS JAGWAYAN,46, KALI KRI SHNA TAGORE STREET, KOLKATA 700 007. 2. REVENUE/RESPONDENT- THE PR. CIT, 3, GOVT. PLACE (WEST) 3. CIT(A)- 15, KOLKATA 4. CIT , KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE, DDO, KOLKAT A BENCHES, KOLKATA. 6 VIKAS JAGWAYAN I.TA NO. 1813/KOL/2017 ASSESSMENT YEAR: 2014-15